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U.S. Slaps Duties on Canadian Jet, Raising Trade Tensions

The Bombardier CS100 airplane, part of the Bombardier’s CSeries, which United States officials found had received unfair government subsidies.Credit
Kevin Van Paassen/Bloomberg

OTTAWA — The United States announced Tuesday that it would impose duties on imports of a new jet made by the Canadian jet maker Bombardier, a decision likely to fuel trade tensions between the United States and Canada just as the two countries face off over the future of the North American Free Trade Agreement.

In response to a trade case filed by the American jet maker Boeing, the United States Commerce Department ruled that Bombardier’s CSeries aircraft, a smaller, regional aircraft that entered service last year, had received subsidies of 219.63 percent of the plane’s sales price, and it said it would begin collecting duties equivalent to that amount.

That will more than triple the price of the new jet, chilling Bombardier’s future sales and potentially giving Boeing more space to expand into the market for smaller aircraft.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Wilbur Ross, the secretary of commerce, said in a statement.

The Commerce Department announcement, which centered on Boeing’s claim that the Canadian jet maker had received unfair government subsidies for its products, was the first in a series of rulings on the duties that are to be charged to Bombardier’s products, rulings that could be reversed in months to come.

The next decision, on Oct. 5, will consider whether Bombardier sold its jets in the United States at an unfairly low price, a practice known as dumping. That could add an additional duty to imports of the jet.

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The United States International Trade Commission, a federal agency that monitors trade, will make a final ruling on the case early next year that could uphold or eliminate the duties. Yet federal customs officials are authorized to begin collecting the duties on Bombardier planes immediately. While the new jet has not yet been imported into the United States, the measure could damp future sales.

Boeing greeted the news in a statement: “This dispute has nothing to do with limiting innovation or competition, which we welcome. Rather, it has everything to do with maintaining a level playing field.”

The ruling was handed down as negotiators from Canada, the United States and Mexico met in Ottawa to negotiate reforms to Nafta, a sprawling trade pact that has guided the North American economy since 1994.

In Canada, where trade supports much of the economy, and news of Nafta is splashed across newspapers and television channels, the talks are being viewed as a test of whether the government will stand up to President Trump’s aggressive stance on trade.

In response to duties on Bombardier, Prime Minister Justin Trudeau has threatened to abandon a planned purchase by Canada of military aircraft from Boeing.

“We won’t do business with a company that’s busy trying to sue us and put our aerospace workers out of business,” Mr. Trudeau said on Sept. 18 in a joint news conference with Prime Minister Theresa May of Britain. Ms. May also criticized the Boeing case, arguing that it would cost jobs in Northern Ireland, where the wings for Bombardier’s CSeries jet are built.

Jerry Dias, president of the Canadian labor union Unifor, said Tuesday that there was “no question” that President Trump’s election to office had ratcheted up trade tensions between the United States and Canada.

“At some point or another, Canada is going to have to strike back in a very aggressive way. Just continuing to take it on the chin doesn’t make any sense,” he told reporters on the sidelines of the Nafta negotiations.

A version of this article appears in print on September 27, 2017, on Page B2 of the New York edition with the headline: U.S. Duties on Canadian Jet Maker Are Cause of Friction. Order Reprints|Today's Paper|Subscribe